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ConocoPhillips Extends Credit-Card Fee Reduction

Meanwhile, the National Retail Federation sends a letter to credit card companies asking to change requirements on storing data.

October 7, 2007, 08:00 pm

HOUSTON -- Building on a similar move made earlier this year, ConocoPhillips extended its temporary reduction in credit card processing fees for Visa, MasterCard, Discover and American Express credit cards through Oct. 31, 2007, the company stated.

On May 3, the company announced it was reducing processing fees for all of its marketers. Since then ConocoPhillips continued to monitor market conditions and the impact it has on the cost of payment transactions, according to the company.

"We have the right to adjust our fees based on the competition and what the marketplace is doing," Kelvin Covington, manager of programs for ConocoPhillips, told CSNews Online, noting that the decision in May to offer reduced rates for its marketers was based on "competition and the high fuel pricing."

Under the program, ConocoPhillips pays the standard fees to the credit cards' associated banks, and provide the benefit of reduced fees as a benefit to its customers, added Covington.

The reduced fee structure in effect is outlined below:

-- Visa: from 2 percent and $0.10 per transaction to 1.9 percent and $0.10 per transaction

-- MasterCard: from 2 percent and $0.10 per transaction to 1.9 percent and $0.10 per transaction

-- American Express: from 2.5 percent and $0.10 per transaction to 2.4 percent and $0.10 per transaction

-- Discover: from 2.5 percent and $0.10 per transaction to 2.4 percent and $0.10 per transaction

In other credit-card industry news, the National Retail Federation (NRF) issued a letter to the Payment Card Industry (PCI) Security Standards Council, asking for changes to the requirements from credit-card companies that require merchants to store credit card data.

In its letter, the NRF cited concerns over data breaches. Credit-card companies usually require retailers to store consumers’ credit card numbers for one year to 18 months, to expedite card company retrieval requests, according to the NRF. The NRF argues in the letter that retailers should have a choice whether they want to store card data at all.

"All of us -- merchants, banks, credit-card companies and our customers -- want to eliminate credit-card fraud," NRF chief information officer David Hogan said in the letter. "But if the goal is to make credit-card data less vulnerable, the ultimate solution is to stop requiring merchants to store card data in the first place."

The letter also emphasizes the retail industry's commitment to PCI compliance, however, it acknowledges that PCI compliance by itself does not discourage hackers from breaking into retailers' systems.

"With this letter, we are officially putting the credit-card industry on notice," said Hogan. "Instead of making the industry jump through hoops to create an impenetrable fortress, retailers want to eliminate the incentive for hackers to break into their systems in the first place."

Under NRF's stance, credit-card companies and the associated banks should give merchants the option to keep nothing but the authorization code provided at the time of sale, as well as a truncated receipt, instead of the current data requirements that put retail customers at unnecessary risk, the NRF stated.

"If all merchants took advantage of this option, credit-card companies and their member banks would be the only ones with large caches of data on hand, and could keep and protect their card numbers in whatever manner they wished," added Hogan in the letter. "The bottom line is that it makes more sense for credit-card companies to protect their data from thieves by keeping it in a relatively few secure locations than to expect millions of merchants scattered across the nation to lock up their data for them."

Hogan concluded the letter by stating, "We believe this is the most effective and efficient approach to protecting credit-card data and preventing a continuation of the data breaches that have been seen in recent years. If the PCI Security Standards Council is willing to solve this problem, NRF and its members stand ready to work with you to help you protect the nation's consumers from the growing threat of credit-card fraud."